363: Attracting Mentors & Raising Capital from High Net Worth Investors

SHOW NOTES FOR EPISODE 363: ATTRACTING MENTORS & RAISING CAPITAL FROM HIGH NET WORTH INVESTORS

Two of the most compelling factors for real estate investing success are having a great mentor and being able to raise lots of money. In today’s podcast, real estate investor and founder of Asym Capital Hunter Thompson addresses both areas by sharing his insider secrets of how he has attracted great mentors and raised over $50 million in private capital from high net worth individuals with unique techniques that can actually draw mentors and investors to you!

What You Will Learn

• How to connect with mentors at networking events
• Key steps to make a networking organization work for you
• What are recession-proof real estate assets and why they can still produce great profits during an economic downturn
• How to make $2,000 from every networking event you attend
• Why investor luncheons don’t work
• 4 key strategies for attracting high net worth investors instead of chasing them down
• How to nurture and grow investor relationships
• 5 Key Success Indicators (KSIs) to Being a Successful Real Estate Investor

About Our Guest

Hunter Thompson

Hunter is a full-time real estate investor and founder of Asym Capital, a private equity firm based out of Los Angeles, CA. Since starting Asym, Hunter has helped more than 300 investors allocate capital to over 100 properties.  He has personally raised more than $30mm of private capital.  Hunter is the author of the new book: Raising Capital for Real Estate: How to Attract Investors, Establish Credibility, and Fund Deals.  Hunter is also the host of the Cash Flow Connections Real Estate Podcast, which helps investors learn the intricacies of commercial real estate from the comfort of their home, car, or office.

What’s Been Happening With Hunter

• Things have been going well with his business
• Has a new name – Asym Capital (Asym is short for asymmetric)
• System, infrastructure, processes have been created to make the system scale
• His business model has changed from the early days when he started out connecting people to cash flow (Previously called Cash Flow Connections) to a full functioning private equity company that has purchased tens of millions of dollars of commercial real estate
• He renamed it Asym Capital  because Asym is short for asymmetric
• He sees a passive investment as being asymmetrical whereas you get all the advantages of the economies of scale, you have access to operators with expertise but not the normal risks associated with owning your own property

Asym Capital’s Multiple Asset Classes

• Since the beginning, his company has focused primarily on recession-resistant asset classes
  • People feel we are near the downside of an economic cycle and are investing with that understanding
  • Hunter has always (since 2011) focused on recession-resistant real estate assets
    • Self storage
    • Mobile home parks
    • Workforce housing – apartments that are catering to 60-100% of the median income for that area
  • They partner with what they feel are the “best in class operators” in all these classes
  • Hunter focuses on raising capital
  • His company writes large checks to these operators, which gives them access to investments most individual investors would not normally have access to

Finding a Mentor Through Network Events

• Revolution occurring in real estate education is very significant
• People have access to the absolute top tier information, for free, through podcasts, books, YouTube, etc.
  • Podcasts, especially, tend to have great invaluable “unfiltered information” from industry experts that would normally cost tens of thousands of dollars through paid mentoring or “guru” real estate programs
  • You can learn most, if not all, of what you need to know to succeed at real estate investing
• When something goes wrong in real estate, it’s not a matter of who has the best strategy, it’s more a matter of who’s your best friend – what relationship can you rely on?  Who can you call to help navigate theses particular situations?
• Before you need get a mentor, you need to think about building “your team”
• Networking events
  • Many people look at the cost of a networking event ($20-50) and don’t take it seriously
  • When Hunter first got started, he would go to three networking events because they were cheap
  • His thought was, real estate can generate millions, if I go to networking events, I at least have to generate thousands for going
  • Because he wasn’t he began to question the value of all his time spent at these meetings
  • He created a system
    • Before going to each meeting, he first decided how he could derive value from the event
      • One of his goals was to attract a mentor
        • He asked, “Who am I trying to meet?”
      • The $2,000 question: How can I achieve “tangible value” from attending this meeting
        • He took 10 minutes before every networking event to think of ideas that he could come up with that would be worth $2,000 to someone I meet
        • He would think of the types of contacts he could meet where he could make $2,000 from the information on contact would yield
        • He thought of people he knew who who he could introduce someone at the event to that would make that person generate $2,000
          • That person, in turn, will often introduce you to someone who would be of the same value to you
          • This is how you can attract a mentor
      • He would ask, “What areas of knowledge/education can I learn tonight that would create value for me?”
        • Due diligence
        • Marketing tactics
        • Books I should read
        • Regulations I need to be aware of
        • Investors, brokers, wholesalers I could meet who, if I could contact them, I could have a $2,000 night
        • Many are at the meeting just to make contacts, which is, indeed, key, but he also suggests that you can pull real tangible value out of the meeting in whatever subject is being presented at the meeting — if you know what to look for in advance
      • This allowed him now to not only ascribe value to his attendance and participation in the meeting but it also would eventually yield a contact that could  become a mentor
      • If you’re looking at each meeting as a place where you can generate $2,000, it’s kinda like the movie Inception where the idea only sticks if you come up with it – like something you can infer, upon reflection
        • He went to a real estate conference where he met someone who was an ATM operator
          • The guy said how difficult it is to place the ATMs because the industry is mature and most people who wants an ATM machine already has access to it and his company is no longer looking for venture capital
          • Hunter is an investor who has money to invest.  If the guy isn’t looking for money, Hunter could have “checked out” of the conversation but, instead, continued talking with the guy and…
          • What the guy said later was that, “If you are looking to invest in these types of things, you should go to a networking event run by a guy named Jeremy Roll.” (see episode #273)
            • Hunter ended up attending a meeting and Jeremy ended up being the single most importance influence on Hunter’s career

How to Select the Right Networking Event

• When he chooses a networking event, he will can go there for at least 6 months
  • You’re not going to see results just going once or twice
  • It must be a group that you know that it, over time, you can shape and grow your reputation and credibility in the long run
• You need to attend a meeting where you know you can bring value, such as referrals that will benefit meeting attendees
  • If, for example, Hunter’s interest is in commercial real estate, and the meeting topic is about single family home investing, he could just “check out” because the topic would be boring or, he could be thinking of how he could approach the speaker and give him info, referrals, etc. that could give him a $2,000 night
    • Maybe he could connect the speaker the “hard money guy” he met earlier in the night and that would benefit the speaker and possibly give him a $2,000 night
  • People will see you of value
  • When you give them something of value, it creates reciprocity that reminds them that “they owe you” a referral or something else that will be valuable to you

 Raising Capital

• Raising capital is the single most sought after and lucrative skill in the real estate sector
• If you have this skill, you will always have a place in the highly lucrative asset class of commercial real estate
• Conversely, if you have a market advantage, can find great deals but don’t have the money to close deals, your other skills are moot
• If you are great at the management side of the business, that’s valuable but without a team member who can raise funds, you won’t get far
• Having the ability to raise millions of dollars distinguishes your ability to invest in 5 properties or 500

Big Mistake as a New Fund Raiser

• When Hunter started out as a real estate investor, he fell in love with mobile home parks
  • He loved the
    • High returns
    • Low risks
    • The fact that they are not building new mobile home parks anymore
    • The tenant owns their mobile home
  • He scheduled an “investor luncheon” for friends, family, etc. to present the investment and raise funds
    • Attendees had to be Accredited Investors
    • He had people in the presentation who, collectively, represented $30 million in capital/net worth
    • He did a great job in the presentation
      • He knew his topic well
      • He had already established a track record
    • At the end of the luncheon, he had raised $0 – no investment money
    • He couldn’t understand what had happened
    • Later he found out that the people he invited were not interested in the asset class, nor were they interested in real estate in general
• What he learned
  • He needed to “reverse the flow”
    • Rather than going out and hunting for potential investors, he needed to create an infrastructure that attracts the right type of investors
      • Not the type of investor that would give him $25,000 because Hunter is their nephew
      • The types of investors he needed were those who would give $50,000, $60,000 0r $100,000 every time he has a deal

How to Attract Instead of Hunt for Investors

• Hunter, over time, found out how to reverse the flow from hunting to attracting
• Change his mindset from “finding the right investor” to “attracting right investor” was critical to his current successful fundraising efforts
• Hunter’s new book, Raising Capital for Real Estate: How to Attract Investors, Establish Credibility, and Fund Deals, shares his successful strategies and teaches how to create an infrastructure that:
  • Attracts the right type of investor
  • Establishes credibility
  • Allows you to fund multi-million dollar deals
• Some of the strategies Hunter has used to attract this type of investor include:
  • Writing articles
    • Sit down and come up with 100 different article topics that you are knowledgeable about that you could write
      • For example, topics like:
        • “5 Reasons to Invest in Self-Storage”
        • “What Low Interest Rates Really Mean for Housing”
        • “What Down Payment Sizes Mean for Housing”
        • “Are we at the End of the Cycle?”
      • List the topics in an Excel spreadsheet
      • Then, give a rating number to each topic from 0 to 10 (with ten being the type of topic that most directly relates to your business)
      • Now, sort the topics with the the highest numbers on the top
      • Then, write the first 10 articles that are the most compelling
    • Going through the actual process of writing the articles will allow you to codify and clarify your ability to communicate your ideas effectively and its the beginning to building the infrastructure you need to attract the right investors
    • Having even 10 articles on your website will do a lot to help establish your credibility to a potential investor
      • You can use the articles, over and over again, when you have have a conversation by saying, “I’m going to email you an article I happened to write on this topic that you can check out.”
        • That effort alone will 4X your close ratio
        • People will read the article and it may prompt them to invest with you
    • If you can write, hire a freelance writer to “ghost write” for you on Fiverr.com, Upwork.com, etc.
  • Podcast hosting or guest appearances
    • Podcasts have exploded
      • In 2014, the number of downloads was 7 billion
      • In 2018, the number increased to 50 billion
      • This revolution has created incredible opportunity to reach specific audiences
      • Market yourself as an “expert guest”
        • In his book, he outlines specific ways to create the interest to get podcast hosts to book you
        • Even if the appearance doesn’t generate specific results, you can send the podcast link, like you send articles, to get people interested in what you do and who you are – which can create credibility
      • You can even start your own podcast
      • Low cost but big returns
    • How to get on a podcast
      • Hire virtual assistants to market you
      • Put together the emails and your profile sheet (OnePage)
      • Make a list of all the podcasts
      • Start with the podcasts that have the least number of reviews to start
        • It’s easier to get booked
        • You can start to build up the experience
        • Can use the previous guest appearances as a show of credibility and to leverage guest spots on bigger podcasts with greater number of reviews and listeners
        • As you build the infrastructure, you’ll see results more quickly
  • Creating conferences
  • Writing a book
  • Focus on the areas where you have gifts or abilities and “job out” the others to get your biggest bang for the buck

How to Nurture Investor Relationships

• They get an email from Hunter with a list of his articles
• As new articles/content comes out they continue to regularly promote those things with the database of investors
• When he has a new deal, he schedules two different calls with his investor list
  • Introductory call with new potential investors (no longer than 30 minutes)
    • Learn about the people as investors
    • Learn about their motivations to invest
    • He shares his “Key Motivating Factor” and his “Last Straw” about the stock market (or whatever motivated you to invest in real estate)
    • Create rapport
    • Toward the end of the call, focus on the fact to confirm that whatever their motivating factor is for being on the call is actually correct and inline with your worldview and is such that you can present a way for them to get out of this (such as an illness in the family where they don’t want to worry about missing work and therefore lose income from missing work) but they still want to increase their passive income
    • Also allow time to answer questions about the deal
    • End precisely at 30 minutes (and no longer) to demonstrate that your time is valuable and to make them not feel like they’re trapped in this endless pitch where you can go on and on
    • Let them know you are going to schedule another call (the due diligence call) to go more into details on the offering
  • Due diligence call
    • This is very serious
    • Practice your FAQs with friends and partners on the deal
    • Practice with mastery in mind
      • Record your answers
      • Listen to yourself back
      • Doing the uncomfortable things most people don’t want to do to help your close ratio
      • Near the end of the call, you mention that you have a pre-determined amount that will likely be over-subscribed and that there will be a timeline where, at a certain point, they will not be able to participate if they don’t move forward before then
      • Hunter does not like to get involved in the hard close pressure situations because, in his opinion, if an investor has hesitance to invest, he doesn’t want them to move forward because of some strategy that he has.  He just wants them to be knowledgeable on the deal so that when they do invest, they do so 100% confidently
      • Most investors won’t invest unless there is:
        • A timeline
        • A likelihood to be over-subscribed
      • Don’t hard close

Investor Communication

• After the deal is closed, it’s critical that you establish very consistent communication
• It is imperative that a timeline be established for regular communication
• Quarterly reports need to always be on time, especially if there is less than stellar news to share – stick to the schedule
• Hunter does an annual call with his reoccurring investors (those who have invested more than once)
• Investors who contribute over $100,000 get an annual gift (i.e. $30 value, wireless branded charger, offee cup, etc.)
• You need to take good care of your investors.  They are the ones responsible for your success

Most Important Factor for Growing a Strong Investor Pool

• A strong operating partner is most critical
• A while back, he was looking at establishing a closing strategy that could increase his closes from 10 to 15%%
  • That is shooting too low – you need to target a 15,000% increase
  • The way to do that is at the top of the funnel
    • It’s not closing strategies
    • It’s creating an infrastructure that can attract thousands of potential investors
      • Podcasts help
      • More and more millennials are becoming investors
        • They are building trusting relationships over the Internet
        • Are listening to thousands of hours of podcasts
        • Tapped into social media

5 Key Success Indicators (KSIs) to Being a Successful Real Estate Investor

• The key to attracting mentors, high net worth individuals and to just be successful in real estate investing is to display characteristics that are similar to the success and motivation of those you are trying to attract
• The 5 KSIs
  1. Having a sense of urgency for accomplishing your goals – this factor alone will help you meet and network with ultra high caliber entrepreneurs
  2. Having a high speed of execution and implementation – there’s a direct relationship from taking an idea from concept to a finished product.  It’s exactly the same rate as the speed of your success
  3. Having a high attention to detail and a high demand for excellence – critical to avoid expensive mistakes
  4. Having an obsession with growth – constantly learning, reading, being challenged
  5. Having a curiosity about new topics and desire for expertise of them
• Those things, cumulatively, make up a successful person
• If you display those characteristics to high performers in the real estate business, they’re going to see that as motivation and be drawn to that and be motivated to help you along the way and that’s when the snowball really starts to work

How to Reach Hunter

• Website: AsymCapital.com
• Podcast: Cash Flow Connections
• To get his new book, click here or go to RaisingCapitalforRealEstate.com (to be available in December)

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